Its Not About Innovation. Kodak’s Downfall Story.

Steve Sasson with the invented camera

Its Not About Innovation. Kodak’s Downfall Story.

A kodak advertisement in the early days

Kodak’s core business was selling films for cameras. Kodak was founded in the late 1880s and became the giant in photography industry in 1970. For almost hundred years Kodak was the leader in photography industry with many innovations and inventions. Nevertheless the company filed for a bankruptcy protection in 2012.

It’s very interesting to study what caused such a tech giant in to such a situation.

Kodak’s Timeline

1889 —Eastman Kodak Company was founded by George Eastman and the first Kodak camera introduced.

This camera was a huge success

1935 —Introduction of the Kodachrome

These are the first successful color materials which was used for both cinema and still photos.

1962 —Sales increased to 1 billion USD.

1963 —Introduction of the Instamatic camera

These cameras enabled the ameteurs to get involved in the industry. 50 million Instamatic cameras were sold within first seven years.

1966 — Sales surpassed $2 billion.

1972 — Worldwide sales passed $3 billion.

1975 —Invention of the digital camera

The first digital camera of the world invented by Steve Sasson, an engineer at Kodak.

1976 —High market shares

Their market shares were so high. Kodak practically pushed their competitors off market.
Cameras: 85% market share, Film: 90% market share

1981 — Sales top $10 billion.

The late 1980s —Rise of digital photography

As a result the sales of analogue cameras began to decrease.

1984 — Customers switched from Kodak to Fuji because the Japanese colour film was 20% cheaper than Kodak’s.

1991- Kodak’s first digital camera.

1991–2011- Kodak released various digital products, but sales kept falling.

2012 — Kodak filed for bankruptcy.

Why was Kodak successful earlier?

You press the button. We do the rest – George Eastman

kodak filmKodak made photography available to everyone as George Eastman believed. What made the company a success is the business model.They offered customers cameras at a very low price. This increased their other business the developing and selling of the camera films.This is how Kodak made profit. People who bought cameras had to buy film and development through Kodak.

 

What happened then?

Simplest explanation is that Kodak was blinded by their current business and failed to recognize new business opportunities in an other area. The Digital photography. Kodak never imagined that their current industry of business will be overrun by the Digital Photography in future.

Missed opportunity – Kills their own invention

Steve Sasson an engineer who worked for Kodak invented the first digital camera in 1975 at Kodak’s R&D Labs. Nevertheless instead of embracing this invention and developing it, Kodak’s top management and executives feared that this invented device would kill their current running business.
Steve Sasson
Steve Sasson
Steve Sasson with the invented camera
Steve Sasson with the first digital camera he invented

According to what Steve Sasson says bellow was the response from the management to his invention.

Thats cute. But don't tell anyone about it.
kodak
Was the managements response to the invention

This way Kodak failed to invest and embrace the new technology they have invented. They killed their own invention.

But others like Sony kept on researching in the Digital Photography. As a result Sony released their first digital camera to the market. Sony Mavica. This had a magnetic floppy disc to record images.

In 1984 the Kodak’s business hugely dropped because most of the customers switched to Japanese film manufacturer Fuji because their film was 20% cheaper then Kodak.

In 1991 Kodak realized that they can no longer survive in the industry of photo films. So they began investing in Digital Cameras. But this was not enough then to survive. They could not compete with the other companies such as Sony and Canon who had got stabled in digital photography by then.

So unluckily in 2012 Kodak had to file for bankruptcy.

In general Kodak failed because it didn’t focus on “what business are we in?”. Instead they focused on “what products do we sell?” and how to increase product sales.

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